Derive ‘ROI’ from ‘DevOps’: An Overview of Performance and Metrics

By Veritis

Derive ROI from DevOps

DevOps brought about a significant change in the software delivery process.

It has not only increased the pace of software delivery but also facilitated a new form of collaboration among teams involved.

This, in turn, resulted in a flexible environment causing an overall cultural transformation within the organizational functioning.

All these directly reflected in enhanced performance, improved productivity, reduced time-to-market, cost savings, less failure rate, faster recovery, among others.

Because of these benefits, DevOps popularity has been growing by leaps and bounds and continuing at a skyrocketing pace.

What drove this DevOps demand? Organizations say it’s the Return on Investment (ROI) on DevOps investment!

Deriving ROI from DevOps

A 2019 leading global survey features DevOps among the top impacting technology trends at the global level, in comparison with other trending solutions.

The survey covered responses from around 2,650 IT professionals, the majority of them being key decision-makers in their respective organizations.

Of this, 48 percent of respondents voted for DevOps as the 2nd most impacting technology trend in 2019, after Edge Computing/IoT.

Artificial Intelligence/Machine Learning, Containers, Decentralized IT, Blockchain and Virtual Reality were only next to DevOps in 2019.

What made DevOps so special? The answer lies in its impact on organizational performance.

According to the State of DevOps Report 2019, IT organizations (especially, elite performers) embracing on DevOps journey see:

 State of DevOps Report 2019 Insights

  • 106 times faster lead time from commit to deploy stage
  • 22 percent minimized time on unplanned work and rework
  • 2604 times faster recovery from failures and unexpected incidents
  • 208 times more deployment frequency
  • 2 times more employee satisfaction, especially among high-performing teams
  • 18 percent improvement in customer satisfaction
  • 6 times more accuracy in estimating operational costs
  • 7 times lower failure change failure rate

50 percent of companies report reduced spend, time-to-market and rise of revenue with DevOps implementation.

DevOps Organizations report more than a five-fold rise in their deployment frequency in 2019, compared to year-on-year. The deployment frequency rate has improved from 46x in 2018 to 208x in 2019.

Overall, organizations with full DevOps potential and successful agile practices report a 60 percent growth in revenues and profits.

DevOps organizations are 2.4 times more likely to witness business growth at the rate of 20% compared to their mainstream competitors.

What to Measure for DevOps RoI?

Return on Investment (ROI) is the first and foremost thing that organizations expect when undertaking a new technology transformation.

Organizations focused on ROI should have their cost calculations beyond technology acquisition, which can later include training, lost productivity, maintenance, rearchitecting and replacement of existing systems.

So, ROI is merely measured in two ways: value-driven and cost-driven.

Cost of Unnecessary Rework Avoided

Source: State of DevOps Report 2019

Organizations often prefer improving processes for additional capacities, rather than looking for recruit and hire.

As the surveys show, encouraging DevOps practices results in higher employee satisfaction, making employees of high-performing teams 2.2 times more willing to recommend their organization as a good workplace.

Cost of Downtime per Year

Source: State of DevOps Report 2019

Measuring a successful DevOps ROI requires consideration of three different metrics: Performance, Philosophy and Velocity.

Returns Possible from Cost of Downtime Avoided

Source: State of DevOps Report 2019

1) DevOps ROI by ‘Performance’ involves measuring:

  • High IT Performers – Who see returns and superior software delivery
  • Medium IT Performers – Who get benefited by eliminating technical debts and prioritizing speed and value
  • Low IT Performers – Who focus on improvement areas and opportunities to set measurable goals

2) DevOps ROI by ‘Philosophy’ involves measuring:

  • People-oriented – Focus on productivity and work quality
  • Process-oriented – Improving by feedbacks, implementation and deploying upgrades
  • Technology-oriented- Hardware, software and service functions

3) DevOps ROI by ‘Velocity’ involves measuring:

  • Release Frequency – Speed of code releases to production
  • Infrastructure Recovery – Rate of production recovery from failures
  • Infrastructure Resiliency – Decline in downtime issues caused by infrastructure failures
  • Infrastructure Efficiency – Resource shielding to protect from production, deployment failures
  • Automation – Reduced manual intervention to fix issues
  • Iterations – Volume of changes made upon user requests/feedbacks

Knowing the factors and measures that drive ROI might not make this complete, as business outcomes are measured in monetary terms.

Calculating ROI from DevOps

Calculating ROI from DevOps requires undergoing a four-step methodology:

1) Software Development Costs

Understanding cost savings begins with analyzing the existing costs. This should ideally begin with the hourly costs of software development. This is usually done by multiplying the average annual salary of a software developer with account for benefits and employer costs, and divide the resultant figure by the number of working hours annually.

2) Cost of Process Introduction

Next comes the costs of introducing processes, from development environments and processes to CI and CD, and data protection and preservation. All these processes involve a common thread despite change in respective working practices. This is where automation plays crucial.

High performers report the lowest manual work across DevOps practices, meaning ‘increased automation’.

Besides the newly-introduced process, the costs caused by adjusting to a new working environment should also be mentioned (if any) to realize the true investment. This means the costs required to catch up to new speeds through new tooling should be added as the overall tooling cost.

3) Cost Savings

Then comes the cost savings achieved through successful implementation of a particular DevOps area. This has to be precise and accurate to easily identify the overall financial advantage realized through that respective process.

4) Identifying Benefiting Areas

This is where the attributable value is calculated comparing the cost savings and the costs incurred for introducing a process. This should be calculated over one year period for short-term realization of savings, and three years and further for long-term realization.

The following formula helps you convert ROI monetary value into ROI percentage:

(Total savings  per hour x cost per hour) – Process introduction costs x 100
Process introduction costs

DevOps Implementation Roadmap

DevOps Implementation Roadmap

Wait no more! See where you stand in your DevOps journey to get the best ROI out of your DevOps investment and drive 100% percent customer satisfaction.

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